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Coming Soon to a High Street Near You? Compulsory Property Auctions

Posted on 20th February 2024 in Dispute Resolution

Posted by

Joanne Young

Senior Associate & Solicitor
Coming Soon to a High Street Near You? Compulsory Property Auctions

The problem of vacant shops

Visit high streets in some parts of England and you will find a lot of empty shops. They can look unattractive, make the public less inclined to venture into their local shopping area and, like a vicious cycle, this then adversely impacts on the businesses clinging on to survival. Tackling the so called ‘death of the high street’ has therefore been taxing everyone from policy makers to retail experts for some years.

The Government’s solution: high street rental auctions

One of the Government’s solutions to the problem is to be found in the new Levelling Up and Regeneration Act 2023. The headline is that the Act has introduced the ability for local authorities to take control of the letting of long-term vacant property by holding rental auctions for such properties, with tenancies (and these will fall outside of the 1954 Act protection) of between 1 and 5 years being offered for these vacant spaces. The properties then have to be put to “high street use” by the tenants; that will include shops and cafes but can be broader – it can things like communal halls, meeting places or offices. Landlords could be required to carry out works to the property in advance of any letting.

The landlords’ perspective: fear or opportunity?

It is understandable that the prospect of this may make landlords throw their hands up in the air in horror. But landlords should not fear that local authorities are going to be seizing properties with abandon.

Firstly, the part of the Act that introduced the high street rental auction is not currently in force – regulations will need to be brought forward to both bring the legislation into force and those same regulations will need to fill a lot of the details that is referred to in the Act. For example, whilst the Act refers to the service of various notices as part of the process, the form and content of those notices will be prescribed in the regulations. We are not aware of the timetable for bringing forward those enabling regulations.

Further, the Act is far from straightforward. Whilst the process appears, on paper, to be relatively simple, the devil will be in the detail in terms of ensuring the process is properly followed. At a time when the capacity of local authorities is already stretched, will local authorities want to be gearing themselves up to use these powers? In areas where there are a lot of empty units, possibly - but for landlords who have a longstanding vacant unit on an otherwise busy high street, would the local authority want to dedicate resources to exercise its powers?

How can Tozers help?

For now, the message for commercial landlords – and, indeed, for commercial tenants, for whom the high street rental auction could present opportunities – is to be aware that this legislation exists. We’d be happy to offer further advice on this issue if needed.

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